Asian Markets Hit Records on US-Iran Peace Hopes as Dollar Retreats

In a move reflecting a potential shift in geopolitical dynamics, senior U.S. officials signaled that a peace deal between the United States and Iran could be imminent, boosting U.S. equity futures. According to reports, the Nikkei 225 surged to fresh record highs as Asian markets opened while the U.S. dollar retreated. However, stagflation fears intensified in the U.S. due to collapsing consumer sentiment and rising inflation expectations under the leadership of the new Fed Chair Kevin Warsh.

This rally in Asian equities comes as Japanese growth data showed notable resilience, with the annualized GDP growth rate hitting 2.1%, surpassing the 1.7% forecast per market data (close May 18, 2026). In comparison to regional peers, Australian consumer confidence saw a significant improvement with a 3.5% increase, while China's loan prime rate remained steady at 3%, further supporting risk-on sentiment in the region despite global inflationary pressures.

Investors should watch the Nikkei's levels following its historic peak, alongside the movement of the U.S. Dollar which faces pressure from weak sentiment data. Looking at the economic calendar, traders are awaiting Fed Governor Waller's speech on May 19, followed by the release of the UK's annual inflation rate on May 20, 2026, which may provide clearer signals on the path of global monetary policy amid stagflation concerns.